Wall Street Journal: Come Clean When Things Go Wrong

The best way of dealing with the press, customers, and critics is to come clean when things go wrong and admit when you make a mistake. We are humans, and no one expects us to be perfect. Even though you may get some negative press, it won’t be anything like the alternative. As well, you will build a level of trust that pays long-term dividends.

I learned this the hard way when I was an entrepreneur.

In my first company, Seer Technologies, where I was chief technology officer, we shied away from the media. We watched every word and were guarded in front of journalists. The only times we granted interviews were when we had good news—deal closes and product announcements. If something went wrong or the press asked about customer problems, we went silent.

In my second company, Relativity Technologies, of which I was CEO, I took a different tack. We opted for openness and full disclosure—good and bad. We were always in the news about our successes. And when things went wrong, the coverage was very sympathetic.When Seer filed for its IPO in 1995, the North Carolina press was eager to cover us because we were a rare local success. But, rather than establish relationships, our management team decided to take the advice of our investment bankers and refuse all interviews. We even refused a cover story for a national technology magazine—after the editor had travelled to interview us. As a result, after the IPO, the only news that the local business journal reported was about our salaries, which it suggested were excessive. And when the company got into trouble, it made front page news. The coverage was negative all the way.

Just after we had completed a round of venture financing, my president and chief operating officer, Matthew Szulik, received an offer to join the hottest company in the region: Red Hat. I expected we would get slammed by the press for losing a senior executive and that there would be rumors and questions about our viability. I decided to call up local journalists and brief them in advance of the press release. I explained that this was a big loss, but that we would survive.

Instead of questioning the viability of the company, the coverage focused on how Relativity had become a recruiting ground for hot companies—how much in demand our people were. The Wall Street Journal ran a front page article on how loyalty meant nothing in the tech industry. It discussed what a difficult decision it was for Szulik to leave such a successful company, because our stock could be worth millions. The article called me a “technology whiz” and hyped our products.

The same happened when my company got into trouble two years later and I had to lay off employees. I invited the local press to come and meet my employees—including the people I had laid off. The next morning, I was surprised to see myself in a full-page article on the front page of the business section of the News and Observer. It was titled “Viva Vivek” and lauded the company for the way it treated its employees. It showed how, even in hard times, employees were showing loyalty, quoting some who had been laid off as saying they planned to show up for work—without pay—until they found new jobs.

The lesson is, because there will be many lemons in life, to learn to make the proverbial lemonade—and be open and honest. That’s the best way of doing damage control and positioning yourself for success.